Lender / Real Estate Investor from Chicago new to BP

[Fernando Angelucci]

Hello BP Family!

My name is Fernando Angelucci and I am excited to join the community.

Here is a little about me and what I want to accomplish:

In my lending business, I will be increasing my portfolio to $20M in capital within the next 5 years to grow Titan Capital into a private investment fund. I then look to grow my fund into a $100M fund within 10 years to parlay the growth into the banking industry.

In my self storage business, I am focusing on acquiring an additional 40 self storage facilities in the next 10 years with the goal of either taking Social Self Storage public or being acquired by a self storage REIT.

In my real estate investment business, I will be growing my portfolio to include an additional 500+ units in the next 5 years to hedge against inflation and to balance my lending business.

In my wholesale business, I am currently working on automating the Chicago and Indianapolis markets to completely remove myself from the business within the next 18 months and will be scaling up to 10 properties sold per month per market.

I am always looking for solid long-term business relationships, be it with experienced real estate investors who are in need of capital, equity partners looking to get a solid return on their money, strategic joint venture partners who are growth oriented, or foreign investors looking to hedge their U.S. currency holdings against inflation through the acquisition of U.S. cash flowing assets.

Shoot me a line and lets start making some money together! There is more than enough to go around!

Cheers!

[Fernando Angelucci]

@Joe Fairless Hello Joe, thank you for the welcome. Got to say, I love what you are doing with your podcast, keep up the good work!

I don't really look at which one is the "most profitable" in and of itself but rather which produces the most passive income with the least amount of liability and daily involvement.

The lending business is great because I do not use any of my own funds, I am in the safest part of the equity stack, the investor takes all the risk with the rehab, and does all the work. 

The real gem of lending is rehypothecation. The following example will show why:

Let's say I have a capital source that costs me 10% APR from Larry the Private Lender. I take 50K at 10% and lend it to a Frank Flipper at 12% and 5 points for 6 months. I am able to turn my money twice a year, so therefore, I am making 12% and 10 points = 22% a year. So I am making a 12% spread or $11,000 - $5,000 = $6,000 a year. Not bad but not great. Here is where the magic happens.

When I lend Frank Flipper the 50K against his property that is currently worth 80K, he gives me two things, a Promissory Note (IOU) and a Security Instrument that secures the Note (Mortgage or Deed of Trust). I can then take the Security Instrument to Paul the Private Lender and say, "Paul, I have a 50K Mortgage on a property worth 80K and once it is done it will be worth 160K, are you willing to lend me money in exchange for holding this Mortgage?

The nice part is the new lender Paul is not looking at my credit profile or reserves, he is looking at the borrower who is on the Mortgage, Frank.

So Paul the Private Lender says absolutely and lends me 50K at 10%, I then go out and lend it to another flipper at 12% and 5 points and turn it twice in a year now adding another spread of $6,000 profit a year to get to $12,000 a year total. Again, not bad but not great. But then I can do it again with the new Mortgage, and again, and again.

I know Hard Money Lenders that rehypothecate their loans between 10 to 20 times. So imagine I do it 20 times to really drive the point home. I now have $1MM at 10% and am making loans out at 22%.

That is 220K - 100K = 120K a year in spreads from starting with just one 50K loan at 10% APR... Amazing! This is how the 0.1% of the US make their money, they are called banks.

Now say I spend $3,000 to get the entity formed and to have my team put everything in place before my first loan, because after my first loan, the borrower pays for all of my expense, including appraisals, BPO's, Prelim Title Reports, etc.

120K on 3K in the first year is a 4,000% Cash on Cash Return. All while shifting all the risk to the borrower, using other peoples money, and not using any of my own credit...

I apologize for the long post, but this stuff gets me jazzed up and I think everyone should know about this.

Cheers!